When the Bank Values the Home Below Your Purchase Price — Why It Happens and Your Five Options

Many buyers hit this after paying a deposit and applying for a loan: the bank's valuation comes in below the agreed price, the approved loan is smaller than expected, and the buyer must find extra cash before transfer day. It's common with second-hand homes priced on sellers' hopes and with new launches whose prices include marketing and brand premiums. Understanding why it happens and what options exist helps you decide without losing the deposit.

How Banks Calculate the Loan

Banks look at two sides. Collateral value: generally the lower of the contract price and the appraiser's valuation, multiplied by the loan-to-value ratio applicable to that loan. Repayment capacity: the borrower's ability to pay. The approved amount is the lower of the two, so even high earners are capped by a low valuation.

Example: you agree to buy at THB 4,000,000 and the bank values it at THB 3,600,000. Lending 90% of collateral value gives THB 3,240,000, leaving THB 760,000 to pay in cash — rather than the THB 400,000 you expected if the valuation matched the price.

Why Appraisals Come in Low

Cause	Explanation
Price above market	The seller priced on hopes, or the buyer agreed a high price out of enthusiasm
New-launch premium	Price includes marketing, freebies and brand, which valuers don't fully count
Few comparables	Thinly traded locations or unusual properties lead to cautious figures
Condition and extensions	Unpermitted extensions or poor condition are discounted
Market conditions	In slow markets valuers tend to be more conservative

Five Options

1. Renegotiate with the seller — use the valuation as a market reference; sellers wanting to close may cut the price or cover transfer fees.
2. Request a review — submit actual nearby transaction prices supporting your price; some banks reconsider with substantive new evidence.
3. Apply to another bank — valuers differ; applying to several banks from the start reduces this risk.
4. Increase the down payment — if you have the cash and still believe the price is fair, for instance because the home has features you specifically want, top up and proceed.
5. Withdraw — if your agreement protects you against loan failure, walking away with your deposit back is sensible when the price is clearly above market.

Prevention Before Paying a Deposit

Better to prevent it: check actual nearby sale prices before agreeing a price, seek a preliminary bank valuation before signing where available, and above all include a clause in the agreement to buy and sell that if the buyer isn't approved for a loan of a stated amount within a stated period, the seller refunds the deposit or the buyer may renegotiate. That clause protects you from losing the deposit in circumstances you can't control.

FAQ

How does the bank's valuation differ from the Treasury Department's appraisal?

The Treasury appraisal is an official value used for transfer fees and taxes, usually below market. The bank valuation estimates market value for lending — a different number.

The seller says another bank valued it higher. Should I believe it?

Possibly, but ask for evidence and apply yourself to see the actual result. Large differences between banks are a reason to reassess the market price carefully.

Does a low valuation mean I shouldn't buy?

Not necessarily, but it's a signal worth heeding. A small gap on a home that truly fits your needs may still be worth it; a large gap warrants a serious rethink.

Conclusion

Valuations below the purchase price are common and tell you something useful about the market. Use them to negotiate, request reviews with evidence, apply to several banks, and above all protect yourself with a loan-approval clause from the outset. Read more on property valuation and negotiation on the MyProperty blog.